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Net Income of $62 Million and Adjusted Operating Income of $84 Million
RICHMOND, Va.–(BUSINESS WIRE)–$GNW–Genworth Financial, Inc. (NYSE: GNW) today reported results for the quarter ended March 31, 2023.
“I am pleased with our performance as we continue to execute our strategy. Genworth’s recent achievements enable us to further refine our priorities to maximize long-term shareholder value by allocating capital from Enact, launching our CareScout services business, and stabilizing LTC through our multi-year rate action plan. As we continue to execute on our priorities, we will be well-positioned to continue returning capital to shareholders.” – Tom McInerney, President & CEO
Consolidated Metrics (Amounts in millions, except per share data) |
Q1 2023 |
Q1 2022 |
Net income5 |
$62 |
$191 |
Earnings per diluted share5 |
$0.12 |
$0.37 |
Adjusted operating income5,6 |
$84 |
$120 |
Adjusted operating income per diluted share5,6 |
$0.17 |
$0.23 |
Weighted-average diluted shares |
500.1 |
517.4 |
Consolidated GAAP Financial Highlights
Enact
GAAP Operating Metrics |
Q1 2023 |
Q1 2022 |
Adjusted operating income7 |
$143 |
$135 |
Primary new insurance written |
$13,154 |
$18,823 |
Loss ratio |
(5)% |
(4)% |
Capital Metric |
Q1 2023 |
Q1 2022 |
PMIERs Sufficiency Ratio2,8 |
164% |
176% |
Long-Term Care Insurance
GAAP Operating Metrics |
Q1 2023 |
Q1 2022 |
Adjusted operating income (loss) |
$(37) |
$27 |
Premiums |
$616 |
$607 |
Net investment income |
$473 |
$447 |
Life and Annuities
GAAP Adjusted Operating Income (Loss) |
Q1 2023 |
Q1 2022 |
Life Insurance |
$(27) |
$(47) |
Fixed Annuities |
$14 |
$13 |
Variable Annuities |
$9 |
$4 |
Total Life and Annuities |
$(4) |
$(30) |
Life Insurance
Annuities
U.S. Life Insurance Companies Statutory Results and RBC
(Dollar amounts in millions) |
Q1 2023 |
Q1 2022 |
Statutory Pre-Tax Income2,9 |
$192 |
$212 |
Long-Term Care Insurance |
$138 |
$247 |
Life Insurance |
$(23) |
$(67) |
Fixed Annuities |
$25 |
$24 |
Variable Annuities |
$52 |
$8 |
GLIC Consolidated RBC Ratio2 |
295% |
296% |
Corporate and Other
Holding Company Cash and Liquid Assets
(Dollar amounts in millions) |
Q1 2023 |
Q1 2022 |
Holding Company Cash and Liquid Assets10,11 |
$233 |
$215 |
Returns to Shareholders
About Genworth Financial
Genworth Financial, Inc. (NYSE: GNW) is a Fortune 500 company focused on empowering families to navigate the aging journey with confidence, now and in the future. Headquartered in Richmond, Virginia, Genworth provides guidance, products, and services that help people understand their caregiving options and fund their long-term care needs. Genworth is also the parent company of publicly traded Enact Holdings, Inc. (Nasdaq: ACT), a leading U.S. mortgage insurance provider. For more information on Genworth, visit genworth.com, and for more information on Enact Holdings, Inc. visit enactmi.com.
Conference Call And Financial Supplement Information
Investors are encouraged to read this press release, summary presentation and financial supplement, which are now posted on the company’s website, http://investor.genworth.com.
Genworth will conduct a conference call on May 4, 2023 at 9:00 a.m. (ET) to discuss its first quarter results, which will be accessible via:
Allow at least 15 minutes prior to the call time to register for the call. A replay of the webcast will be available on the company’s website for one year.
Prior to Genworth’s conference call, Enact will hold a conference call on May 4, 2023 at 8:00 a.m. (ET) to discuss its results from the first quarter, which will be accessible via:
Allow at least 15 minutes prior to the call time to register for the call.
Use of Non-GAAP Measures
This press release includes the non-GAAP financial measures entitled “adjusted operating income (loss)” and “adjusted operating income (loss) per share.” Adjusted operating income (loss) per share is derived from adjusted operating income (loss). The chief operating decision maker evaluates segment performance and allocates resources on the basis of adjusted operating income (loss). The company defines adjusted operating income (loss) as income (loss) from continuing operations excluding the after-tax effects of income (loss) from continuing operations attributable to noncontrolling interests, net investment gains (losses), changes in fair value of market risk benefits attributable to interest rates, equity markets and associated hedges, gains (losses) on the sale of businesses, gains (losses) on the early extinguishment of debt, restructuring costs and infrequent or unusual non-operating items. A component of the company’s net investment gains (losses) is the result of estimated future credit losses, the size and timing of which can vary significantly depending on market credit cycles. In addition, the size and timing of other investment gains (losses) can be subject to the company’s discretion and are influenced by market opportunities, as well as asset-liability matching considerations. The company excludes net investment gains (losses), changes in fair value of market risk benefits attributable to interest rates, equity markets and associated hedges, gains (losses) on the sale of businesses, gains (losses) on the early extinguishment of debt, restructuring costs and infrequent or unusual non-operating items from adjusted operating income (loss) because, in the company’s opinion, they are not indicative of overall operating performance.
While some of these items may be significant components of net income (loss) in accordance with GAAP, the company believes that adjusted operating income (loss) and measures that are derived from or incorporate adjusted operating income (loss), including adjusted operating income (loss) per share on a basic and diluted basis, are appropriate measures that are useful to investors because they identify the income (loss) attributable to the ongoing operations of the business. Management also uses adjusted operating income (loss) as a basis for determining awards and compensation for senior management and to evaluate performance on a basis comparable to that used by analysts. However, the items excluded from adjusted operating income (loss) have occurred in the past and could, and in some cases will, recur in the future. Adjusted operating income (loss) and adjusted operating income (loss) per share on a basic and diluted basis are not substitutes for net income (loss) or net income (loss) per share on a basic and diluted basis determined in accordance with GAAP. In addition, the company’s definition of adjusted operating income (loss) may differ from the definitions used by other companies.
Adjustments to reconcile net income (loss) to adjusted operating income (loss) assume a 21 percent tax rate and are net of the portion attributable to noncontrolling interests. Changes in fair value of market risk benefits attributable to interest rates, equity markets and associated hedges are also adjusted for changes in reserves, attributed fees and benefit payments.
The tables at the end of this press release provide a reconciliation of net income available to Genworth Financial, Inc.’s common stockholders to adjusted operating income for the three months ended March 31, 2023 and 2022 and reflect adjusted operating income (loss) as determined in accordance with accounting guidance related to segment reporting.
This press release includes the non-GAAP financial measure entitled “core yield” as a measure of investment yield. The company defines core yield as the investment yield adjusted for items that do not reflect the underlying performance of the investment portfolio. Management believes that analysis of core yield enhances understanding of the investment yield of the company. However, core yield is not a substitute for investment yield determined in accordance with GAAP. In addition, the company’s definition of core yield may differ from the definitions used by other companies. A reconciliation of reported GAAP yield to core yield is included in a table at the end of this press release.
Re-segmentation
Beginning in the first quarter of 2023, the company changed its operating segments to better align with how it manages the business. All prior period information has been re-presented to reflect the reorganized segment reporting structure. Under the new structure, the company has the following three operating segments: Enact (mortgage insurance), Long-Term Care Insurance and Life and Annuities (which includes life insurance, fixed annuities and variable annuities). In addition, the company also has Corporate and Other, which includes debt financing expenses that are incurred at the Genworth Holdings level, unallocated corporate income and expenses, eliminations of inter-segment transactions and the results of other businesses that are reported outside of the operating segments, such as certain international businesses and discontinued operations. Corporate and Other also includes start-up results related to fee-based services, care support and advice, clinical assessments and consulting offered by CareScout LLC (CareScout), to advance the company’s senior care growth initiatives.
Long-duration targeted improvements
On January 1, 2023, the company also adopted new GAAP accounting guidance that significantly changed the recognition and measurement of long-duration insurance contracts, commonly known as LDTI. This accounting guidance impacted the company’s LTC, life insurance and annuity products and was applied as of January 1, 2021. While the new guidance has had a significant impact on existing GAAP financial statements and disclosures, it does not impact the cash flows or underlying economics of the business, business strategy, statutory net income (loss) or RBC of the U.S. life insurance companies, and it does not have an impact on the Enact segment, Corporate and Other or management of capital. All prior period information has been re-presented to reflect the adoption of LDTI.
All financial information in this press release is based on the company’s implementation of LDTI and is currently unaudited. The information in this document is being provided on an unaudited basis to assist investors and others in evaluating the impact of LDTI on the company’s financial position and results of operations. It is possible that the final audited financial results may differ, perhaps materially, from the information included in this press release.
Statutory Accounting Data
The company presents certain supplemental statutory data for GLIC and its consolidating life insurance subsidiaries that has been prepared on the basis of statutory accounting principles (SAP). GLIC and its consolidating life insurance subsidiaries file financial statements with state insurance regulatory authorities and the National Association of Insurance Commissioners that are prepared using SAP, an accounting basis either prescribed or permitted by such authorities. Due to differences in methodology between SAP and GAAP, the values for assets, liabilities and equity reflected in financial statements prepared in accordance with GAAP are materially different from those reflected in financial statements prepared under SAP. This supplemental statutory data should not be viewed as an alternative to GAAP or used in lieu of GAAP.
This supplemental statutory data includes company action level RBC ratios for GLIC and its consolidating life insurance subsidiaries as well as combined statutory pre-tax earnings from the principal U.S. life insurance companies, GLIC, GLAIC and GLICNY. Statutory pre-tax earnings represent the net gain from operations before dividends to policyholders, refunds to members and federal income taxes and before realized capital gains or (losses). The combined product level statutory pre-tax earnings are grouped on a consistent basis as those provided on page six of the statutory Annual Statements. Management uses and provides this supplemental statutory data because it believes it provides a useful measure of among other things the adequacy of capital. Management uses this data to measure against its policy to manage the U.S. life insurance companies with internally generated capital.
Cautionary Note Regarding Forward-Looking Statements
This press release contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as “expects,” “intends,” “anticipates,” “plans,” “believes,” “seeks,” “estimates,” “will” or words of similar meaning and include, but are not limited to, statements regarding the outlook for the company’s future business and financial performance. Examples of forward-looking statements include statements the company makes relating to potential dividends or share repurchases; future return of capital by Enact Holdings, Inc. (Enact Holdings), including share repurchases, and quarterly and special dividends; the cumulative amount of rate action benefits required for the company’s long-term care insurance business to achieve economic break-even status; future financial performance and condition of the company’s businesses; liquidity and future strategic investments, including new senior care services and products; future business and financial performance of CareScout; as well as statements the company makes regarding the potential of a recession or the re-emergence of the coronavirus pandemic (COVID-19).
Forward-looking statements are based on management’s current expectations and assumptions, which are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Actual outcomes and results may differ materially from those in the forward-looking statements due to global political, economic, inflation, business, competitive, market, regulatory and other factors and risks, including but not limited to, the following:
Contacts
Investors: Sarah E. Crews
InvestorInfo@genworth.com
Media: Amy Rein
Amy.Rein@genworth.com
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